Another Cable TV Operator Switching to Streaming Video

The migration from pay-TV to over-the-top video among distributors is gaining momentum.

Gigabit Minnesota, a regional pay-TV operator near Minneapolis, is getting out of the TV distribution business. In an acknowledgment of changing market forces toward streaming video, Gigabit has begun informing its 10,000 customers that it would cease distributing linear TV on Jan. 31.

In a statement, Gigabit cited increased carriage fees from content holders for the decision to focus on high-speed Internet service and help facilitate access to third-party online TV services such as Sling TV and Philo TV, among others.

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“The TV business is changing,” the company said. “This [content] cost increase makes our TV service just way too expensive so we’re going to be leaving [the business],” the company said.

The move follows a North Kansas pay-TV operator that announced it would switch toward broadband distribution and away from linear TV. Major pay-TV operators such as Comcast Cable continue to hemorrhage subscribers, including 149,000 subs in the most-recent fiscal period.

Gigabit, like Rainbow Communications in Kansas, is seeking to direct customers to online TV platforms, in addition to SVOD services such as Netflix, Amazon Prime Video and Disney-owned Hulu.

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It offers myriad high-speed Internet plans, including fibre-optic, priced from $69.95 for 500 Mbps. Indeed, Comcast said it added more than 400,000 broadband subs in Q4, and 1.4 million subs in 2019.

Kansas Pay-TV Operator Switching to Streaming Video Only

In a sign of the times, Rainbow Communications, a 67-year-old pay-TV operator based in Everest, Kansas, has begun notifying customers that it will cease distributing linear broadcast TV channels, effective June 30.

In the place of pay-TV, Rainbow will give customers direct access to third-party over-the-top video distribution through its broadband network.

“Most of our customers have chosen this route because watching video now accounts for 80% of our Internet network traffic,” the company said in a statement. “Therefore, we have decided to focus our efforts on delivering the best Internet experience possible, and end our TV service offering.”

The nation’s largest pay-TV providers representing about 93% of the market lost about 1.74 million combined video subscribers in the third-quarter fiscal period (ended Sept. 30, 2019), according to Leichtman Research Group.

Rainbow said the switch could save pay-TV subs upwards of $600 in cable fees, excluding SVOD subscriptions.

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The former Northeast Kansas telephone operator with more than 6,000 rural subs is offering assistance to those customers looking to cut the cord with a “streaming care” program designed to determine the best alternative TV service that fits their household.

Beginning in February, Rainbow will assist customers in choosing which online TV streaming service is preferable based on their favorite channels, recommend devices and in-home installation of proprietary high-speed Internet service.

“Rainbow has been honored to be your TV provider through the years and looks forward to delivering a new exciting, inexpensive way to watch your favorite TV channels over our high-speed internet service,” said the company.

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